Regional GHG Initiative Reveals Auction Results For CO2 Allowances

The nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI) – a market-based regulatory program to reduce greenhouse-gas (GHG) pollution – have announced the results of their 32nd auction of carbon-dioxide (CO2) allowances.

At the auction, 15,089,652 CO2 allowances were sold at a clearing price of $4.53. Bids for the CO2 allowances ranged from $2.10 to $12.65 per allowance, says RGGI Inc., the nonprofit organization providing technical and administrative services to the states participating in the initiative.

According to RGGI, the June 1 auction, the second to take place in 2016, generated $68.3 million for reinvestment in strategic programs, including energy efficiency, renewable energy, direct bill assistance and GHG abatement programs. Cumulative proceeds from all RGGI CO2 allowance auctions exceed $2.5 billion.

Ten million cost containment reserve allowances were also available for sale. However, because none was sold, they will all remain available for sale in 2016.

RGGI is composed of CO2 budget trading programs in each state (based on each state’s independent legal authority). A CO2 allowance represents a limited authorization to emit one short ton of CO2, as issued by a respective state. A regulated power plant must hold CO2 allowances equal to its emissions for each three-year control period. RGGI’s third control period began on Jan. 1, 2015, and extends through Dec. 31, 2017.

According to RGGI, the states participating in the third RGGI control period – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont – have implemented the first mandatory market-based regulatory program in the U.S. to reduce GHG emissions. The 2016 RGGI cap is 86.5 million short tons and declines 2.5% each year until 2020. The RGGI states also include interim adjustments to the RGGI cap to account for banked CO2 allowances. The 2016 RGGI adjusted cap is 64.6 million short tons.

“Another successful auction has generated proceeds for reinvestment in programs which strengthen our energy system and benefit consumers,” states Katie Dykes, deputy commissioner at the Connecticut Department of Energy and Environmental Protection and chair of the RGGI Inc. board of directors. “In Connecticut, these proceeds help fund energy efficiency and renewable energy programs that save families and businesses money while further reducing harmful carbon pollution.”